## Facts

- Five related putative class actions were brought by cigarette consumers against major tobacco manufacturers and affiliated research/lobbying entities.
- Plaintiffs did not seek personal injury or health-related damages; they sought economic relief based on alleged deception concerning nicotine.
- Plaintiffs alleged defendants misrepresented nicotine’s addictive qualities and manipulated nicotine levels to increase dependence while publicly denying addictiveness.
- Plaintiffs sought restitution of amounts paid for cigarettes (dating from 1980) and injunctive/declaratory relief requiring corrective disclosures and barring further misrepresentations.
- Pleaded causes of action included common-law fraud, violations of New York General Business Law (GBL) §§ 349 (deceptive acts) and 350 (false advertising), and civil conspiracy.
- The trial court certified classes (redefined broadly to purchasers/smokers of defendants’ cigarettes) and denied motions to dismiss for failure to state a claim and for lack of jurisdiction over certain parent entities.
- Defendants appealed from the class certification orders and denials of dismissal.

## Issues

1. Whether class treatment was proper given individualized questions concerning reliance, causation, addiction, and reasons for smoking.
2. Whether plaintiffs stated claims for common-law fraud, GBL §§ 349 and 350 violations, and civil conspiracy where the alleged injury was repayment of money spent on cigarettes.
3. Whether plaintiffs adequately pleaded reliance (fraud) and injury/causation (GBL §§ 349–350).
4. Whether, and to what extent, the Federal Cigarette Labeling and Advertising Act preempted state-law theories premised on cigarette advertising and promotion.
5. Whether New York courts had personal jurisdiction over certain parent entities (in light of the merits rulings).

## Decision

- The Appellate Division reversed the trial court’s orders.
- Class certification was denied and the previously certified classes were decertified.
- Defendants’ motions to dismiss were granted and the complaints were dismissed.
- The court concluded individualized issues predominated and rendered the actions unfit for class adjudication.
- The court concluded the complaints failed to plead legally cognizable injury and, for fraud, failed to plead classwide reliance on specific misrepresentations.
- Advertising- and promotion-based theories were limited, in part, by federal preemption under the Federal Cigarette Labeling and Advertising Act.
- Personal-jurisdiction issues concerning certain parent entities were rendered academic by dismissal on the merits.

## Legal Principles

- Class certification is improper where individualized issues (including reasons for consumer behavior, exposure to statements, reliance, and causation) predominate and make the action unmanageable.
- Common-law fraud requires actual reliance; allegations of an industry-wide scheme do not eliminate the need to connect specific misrepresentations to each plaintiff’s decision-making.
- GBL §§ 349 and 350 do not require common-law reliance, but they require a non-speculative injury caused by the challenged deception.
- Seeking restitution of the purchase price for a product that performed as purchased, without alleging a distinct cognizable harm, is insufficient to plead injury under fraud and consumer-protection theories in this setting.
- New York does not recognize an independent tort of civil conspiracy; it depends on a viable underlying tort.
- State-law claims targeting cigarette advertising or promotion may be restricted by federal preemption under the Federal Cigarette Labeling and Advertising Act.

## Conclusion

The court rejected class treatment and dismissed the complaints because individualized questions of reliance and causation predominated and because plaintiffs’ refund theory did not plead a cognizable, non-speculative injury where purchasers received the cigarettes they paid for, with additional limits imposed on advertising-based theories by federal preemption.


Small v. Lorillard Tobacco Co., 252 A.D.2d 1, 679 N.Y.S.2d 593 (N.Y. App. Div. 1st Dep’t 1998)